The Trump Administration has brought both helpful and harmful changes to Big Tech, some awkward relationships, and enough drama for a lifetime. Big Tech companies were among the biggest beneficiaries of the Trump Tax Cuts of 2017, but they were also made to pay—in tariffs—for their decisions long ago to move supply chains and manufacturers to China. The disconnect in values between tech leaders like Tim Cook and the Trump administration couldn’t have been much wider, and yet tech companies were forced to maintain cordial relations with the White House.
Now Big Tech is looking at the implications of two different futures—one with Trump and the other with Joe Biden—and each has its pros and cons. Here’s what’s at stake for tech in today’s presidential election.
Let’s start with the money. Big tech companies have done very, very well during the Trump years.
They’ve benefited from a strong stock market, and the biggest tech companies—like Apple and Alphabet—got a special gift in the Trump Tax cuts of 2017, where their corporate income tax rate dropped from 35% to 21%. The tax bill also relieved U.S. multinationals of the obligation to pay taxes on profits earned in other countries, requiring them to pay taxes only on profits earned at home.
Silicon Valley companies might be sad when a new Democratic president reverses some of these policies, like raising the corporate tax rate back up to 28%.
Something else Silicon Valley probably won’t like? A Biden tax plan could change the venture capital business model. Right now, the wealthy people who invest money in the funds of VC firms can pay a lower capital gains tax rate on some of the proceeds they earn from the fund’s investments. But Biden’s tax plan would tax long-term capital gains as ordinary income for people earning more than $1 million per year.
“If that rate increased, it’s a less attractive component to investing in a venture fund,” says investor Brad Baum of Chicago-based VC Lightbank. “If there’s less limited partner investment in a fund, you’ll see smaller funds with less capital to deploy, and tighter investment terms that are potentially less favorable to [startup] founders.”
If Trump is rejected by the electorate, Big Tech won’t miss his immigration policies. Trump Administration continues to turn the screws on H-1B visas, which tech companies have used to hire foreign workers for high-skill positions in the U.S.
The administration’s newest set of restrictions say that both new and existing H-1B visas can be only used for employees who are paid $208,000 or more. The move is meant to make it harder for U.S. companies to hire foreign workers for jobs that could be done by American workers with comparable skill sets. People already working in tech on an H-1B visa could easily find that they no longer satisfy the requirements when they try to renew.
The Trump Administration is also proposing the elimination of the H-1B lottery, used when applications exceed the number available visas. Instead the government would award the visas based on which applicants would have the highest salaries. The changes could make recruiting top talent more difficult, and paying for it much more expensive.
In contrast, Joe Biden released a policy statement pledging to reform the H-1B system and work toward removing limitations on the number of green cards the government issues yearly.
Regulating social media
There’s a desire to regulate social media companies like Facebook and Twitter from lawmakers on both sides of the aisle in Washington. While a number of bills sponsored by both Democrats and Republicans have emerged in the past two years, none have found much traction.
Now the focus has turned to the problems of disinformation and political bias on the networks. There are grievances on both sides, says Garrett Johnson of the Lincoln Network, a nonprofit focused on forming connections between conservatives and Silicon Valley.
“On the left, a big part of the backlash against tech platforms is blaming them for ‘helping’ elect President Trump,” Johnson says in an email. “Now, many conservatives believe Big Tech is betting big on Biden, taking bolder moves like blocking the New York Post story, fact-checking the president, or suspending [the accounts of] high level officials.”
Some type of regulation of social media’s content moderation practices may happen in 2021 regardless of what party holds the Oval Office. But the regulation’s approach could be greatly affected by the party in control of the White House, especially if that party also controls the Senate. A Republican-sponsored bill is likely to be anchored by censorship concerns, while a Democratic-sponsored bill is apt to address a full spectrum of issues, including content moderation, algorithmic transparency, data privacy, and disinformation.
Section 230 under threat, regardless
Donald Trump’s approach to checking the power of social media companies came in an executive order proposing changes to Section 230 of the Communications Decency Act, which shields social media companies from lawsuits over user content they host, or decide not to host. The order scaled back the protections in the 1996 law, and tasked the Federal Trade Commission with investigating social media companies showing signs of content bias.
The timing of the order, which appeared just after Twitter put a fact-check label on a presidential tweet for the first time, seemed like retaliation. Its legality was roundly questioned. The Department of Justice wrote a piece of legislation based on the order, but it has not advanced in Congress. If Trump wins a second term, the pressure to push such legislation through Congress could increase.
Biden has already said that if he wins the presidency he will immediately invalidate Trump’s Section 230 order. But Biden is no big fan of Section 230 either. He’s spoken critically of its protections, but so far not outlined a plan for reforming Section 230.
Johnson points out that regardless of who wins the White House, there are limitations to what the President can do unilaterally to rein in Big Tech. Major tech issues like Section 230 and federal privacy legislation require Congress to have enough consensus to act, he says.
“Even if Democrats take the Senate, it’s not clear this consensus exists, given divisions within the GOP and Democratic coalitions,” Johnson says. “At this stage, the techlash on both sides entails more of a rhetorical shift than a major policy change. ”
Reining in Big Tech
The Department of Justice has already filed its antitrust case against Alphabet over the company’s dominance in internet search and advertising. The DOJ is also brewing up an antitrust case against Apple over its operation of the App Store, while the Federal Trade Commission is working on a similar case against Amazon. In addition, the FTC has assembled an antitrust case against Facebook and is reportedly in the final stages of deciding whether or not to file it.
All of these cases could take years to play out in court, but it’s possible the pace would increase with a Biden presidency. Biden was critical of Silicon Valley when he was vice president under Obama. He’s likely to support moves by the Congress to retrofit antitrust law to better deal with the digital economy.
Much of the activity around tech antitrust is coming from the House Antitrust Subcommittee, which early last month released an extensive report of its own investigation into the anticompetitive practices of Alphabet, Amazon, Apple, and Facebook. The committee will eventually write legislation to overhaul U.S. antitrust laws, which would have a better chance if Biden took the White House and Democrats took the Senate.
Ultimately, the government must decide if it makes sense to break up Big Tech to keep tech companies’ anticompetitive practices in check.
Dealings with China
Under Trump, the tech industry was dragged into a trade war with China it didn’t want. Apple in particular was hurt by tariffs the Administration slapped on some of its consumer electronics products, which are primarily sourced, assembled in, and imported from China. Tim Cook was placed in the awkward position of engaging with the White House, and even participating on several of the administration’s labor task forces, as a way of mitigating the harm Trump’s trade policies could do to Apple.
If Trump stays in the White House, the trade war continues and the tariffs stay in effect. That’s despite the fact that the trade war with China has been largely a failure: The U.S. trade deficit with China is now greater than when Trump took office in 2016.
If Biden wins, a more traditional, predictable, and far less belligerent posture toward China will likely take hold. However, Biden is far more likely to hold China to account for its human rights abuses than Trump has been, but he’s more likely to do it through a coalition of countries, not with unilateral confrontation, experts say.
The Trump administration was aware of the U.S.’s long-term competition with the Chinese in developing technologies like AI and quantum computing. Early this year, it proposed doubling federal spending on both AI research (to almost $2 billion) and quantum information science (to $860 million) over the next two years. But it also cut the budgets of almost all major research agencies in the federal government, including the National Institutes of Health and the Energy Department’s Science Office. In fact, Trump has slashed research budgets every year he’s been in office. A Biden administration might take a more well-rounded approach to funding research.
All things considered, Big Tech seems to be hoping for a Biden future over another four years of Trump. According to the Center for Responsive Politics, five out of the 10 top contributors to the Biden candidate committee in 2020 were tech giants. Together, Alphabet, Amazon, Apple, Facebook, and Microsoft gave more than $10 million. Big Tech makes no appearance at all in Trump’s top 25 donors.